Driving strong growth in South Africa through innovation and responsible investing

OMSA CEO Dave Macready

Old Mutual South Africa (OMSA) continues to grow as a market leader by gaining market share from strong performance across all its business segments.

OMSA CEO Dave Macready comments, “We have stepped up the pace of our business development by launching innovative financial solutions for our customers, developing new forms of distribution, and we’ve done this despite tough market conditions.”

During 2015, the business saw excellent growth in its life sales in South Africa by 25% and has now captured about one-third of the SA market. With its Value of New Business at R2.2 billion, OMSA grew market share to 37% of South African insurers. (Source: UBS SA Insurance Market Share Monitor – December 2015). OMSA recorded good profit growth of 10% on the prior year through consistent investment performance, growth in distribution, delivering to customers’ needs, and the consolidation of Old Mutual Finance.

Macready says, “As the Group continues on its path of managed separation, it remains key that Old Mutual South Africa continues to perform, invest and innovate. We are very excited about the future and remain focused on our true purpose of helping our customers achieve their financial goals.

“Not only are we a powerful force in the South African financial services industry and in the wider society, but we also continue to  deliver on our promise to customers - while investing their funds in ways that create a positive future for them, their families and communities across the nation.”

Innovative life and savings solutions

Key to creating a better future is improving the savings culture and increasing South Africa’s savings rate. Findings from the 2015 Old Mutual Savings and Investment Monitor show that only 20% of working metropolitan South Africans have any kind of formal savings, and overall financial confidence is steadily declining.

“In recognition of the high levels of indebtedness and financial constraints that our customers face, we are scaling up our involvement in financial education and enhancing our current programmes. With technology providing more people with access to products and services, our business is also making great strides in bringing innovative products to market that encourage South Africans to save,” says Macready.

•  In March last year, Old Mutual took the first mover advantage with its Tax-Free Savings Account –   capturing approximately 40% of the local non-bank market.

o    It was the first mainstream product offered through direct/digital and intermediated channels and resulted in excellent sales of R367 million by the end of 2015. To date, nearly 20% of Old Mutual’s tax-free savings account sales are online, showing that a younger, more digital-savvy audience is making use of this saving option.

•   During August 2015, Old Mutual launched its Money Account, which is the first product in South Africa that combines a transactional (SWIPE) account with a savings (SAVE) account.

o    It was listed by Moneyweb as one of the Top 10 Innovative financial products of 2015 and about 100 000 accounts were opened by the end of March 2016.

•  In October 2015, Old Mutual partnered with Telkom Mobile to offer innovative new solutions to their customers, the first of which gives Telkom’s prepaid subscribers the opportunity to opt in for loyalty funeral cover - underwritten by Old Mutual – when they recharge their pre-paid airtime, at no additional cost. More initiatives are planned to drive value for both companies and their customers. 

•  Another success is the unique 2-IN-ONE Savings Plan which Old Mutual brought to the market in 2014 to specifically assist financially constrained customers. Savings are split between two “pockets” – a long-term one (to meet future goals) and a short-term one (which can be used as an accessible emergency fund). Building on this innovation introduced in South Africa, similar products were subsequently launched in Namibia, Malawi and Kenya. 

SA’s first Responsible Investment Equity Index Fund

In addition to the focus on helping customers to improve their financial wellbeing, Old Mutual is also committed to responsible investing in both listed and unlisted assets. It allows for the responsible stewardship of customers’ investments, as well as the development of impact funds to build vital socio-economic infrastructure and funding. As one of Africa’s largest investors in economic and social infrastructure, Old Mutual has about R126 billion invested or committed to projects with socio-economic and environmental aims.

“We see that progressive companies naturally think long-term, and it has become vital to embed environmental, social and governance principles in their strategies. As more of our customers consider the long-term sustainability of companies before investing, our Old Mutual Investment Group has just launched the first MSCI Environmental, Social and Governance (ESG) equity index fund in South Africa, called the Old Mutual Responsible Investment Equity Index Fund,” says Macready.

The Fund, which applies the MSCI ESG Research methodology to its index construction, invests in the FTSE/JSE Shareholder Weighted All Share Index (SWIX) with best in class ESG credentials. This innovation provides institutional investors access to an index that integrates ESG considerations into their SA equity exposure.

“As a responsible business with an important leadership role to play in our country, we realise the importance of innovation and doing things differently. Whether it’s responsible investing or making it easier for our customers to do business with us, we’ll always strive to be the South African champion for enabling positive futures,” concludes Macready.